Israeli Settlements in Palestine are illegal under International Law but USA vetoes all resolutions against Israel at the United Nations
so to answer your question it would be illegal for this man to even build his own home next to the Palestinian home but as long as he's going to ignore international law might as well take the home that's already there - why build a new one ?
remember this is NOT in Israel ! he is stealing homes OUTSIDE OF ISRAEL in territories under Israeli military occupation, which once enough settlements are built will expel the native population and become part of Israel.
this is how Israel was created to begin with.